Direct Compensation Property Damage coverageopens a pop-up with definition of Direct Compensation Property Damage coverage (DCPD) was once a mandatory part of no-fault car insurance coverage in Ontario. As of January 1, 2024, Ontario car insurance customers can choose whether to opt out of DCPD coverage at any time. Here’s a breakdown of how this change may affect you:
What is no-fault insurance?
A no-fault insurance system doesn’t mean you’re never at fault for an accident. Instead, no-fault insurance refers to how your insurance claim is paid. Under a no-fault insurance system, you deal with your own insurance company for your claims, whether you’re at fault for a collision or not. This system is in most Canadian provinces, including Ontario, Quebec, Alberta, British Columbia, Nova Scotia, New Brunswick, Newfoundland and Labrador, and PEI.
It’s also important to note that DCPD doesn’t apply in British Columbia’s no-fault system. In British Columbia, Basic Vehicle Damage Coverage (BVDC) applies and includes a maximum coverage limit of $200,000 for vehicle-related damages.
What is DCPD coverage?
After a car accident, your insurer completes an investigation of the collision to determine how at fault you are for the accident on a scale of 0% to 100%, based on fault determination rules. If you’re found to be 50% responsible, that means you’re partially at-fault.
Under the no-fault insurance system, DCPD coverage is the portion of your car insurance policy that covers damage to your vehicle if you’re not at fault for a collision and if at least one other vehicle involved in the accident has coverage under a motor vehicle liability policy issued by an insurer licensed in the province where the accident takes place or follows DCPD rules. In this case, your insurer will reimburse the cost to repair or replace your vehicle so you can get back on the road as quickly as possible.
Here's what’s covered by DCPD coverage if you’re not at fault:
- Damage to your vehicle, including loss of use
- Damage to any personal property or belongings that were in the vehicle at the time of the accident, except for cargo that you’ve been paid to transport (in your policy, this is defined as “contents being carried for reward”)
What if I’m at fault for a collision?
If you’re at fault for a collision, damage to your vehicle is only covered if you’ve also bought all-perilsopens a pop-up with definition of all-perils or collisionopens a pop-up with definition of collision coverage. Both forms of coverage are optional, so talk to your group’s licensed car insurance broker to make sure you have the proper protection for an at-fault accident.
How does opting out of DCPD coverage affect me?
As of January 1, 2024 in Ontario, you can opt out of DCPD coverage by providing written confirmation and signing a form acknowledging that you’re waiving this coverage. If you finance or lease your vehicle, you must contact your financing company or lessor and ask for their permission before you can opt out of DCPD coverage.
It's important to know that once you’ve opted out of DCPD coverage, you won’t be reimbursed for damage after a collision by your insurer, anyone who may have caused the accident, or their insurer — even if you’re not at-fault. If you opt-out, you won’t receive coverage under the DCPD, Collision, or All perils section of your policy, including reimbursement for additional expenses like towing, storage, or a rental vehicle. While you may have a lower premium, you’ll have to pay out of pocket after a collision, which may or may not be higher than any potential savings.
If you change your mind and wish to opt back into DCPD coverage, you can contact your group’s broker to add it back to your policy.
It's important to weigh your options carefully. Reach out to your group’s broker if you have any questions related to your policy and coverage needs.
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